3-i CHAPTER 3. MARKET AND TECHNOLOGY ASSESSMENT

TABLE OF CONTENTS

3.1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 3.2 DISTRIBUTION TRANSFORMER DEFINITION . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 3.3 PRODUCT CLASSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2 3.4 NATIONAL SHIPMENT ESTIMATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3 3.5 MANUFACTURERS OF DISTRIBUTION TRANSFORMERS . . . . . . . . . . . . . . . . . 3-5 3.5.1 Small Business Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6 3.5.2 Distribution and Sales Channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6 3.5.3 Import Duties on Core Steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-8 3.6 TOTAL OWNING COST EVALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-8 3.7 VOLUNTARY PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-10 3.7.1 National Electrical Manufacturers Association TP 1 Standard . . . . . . . . . . . . 3-10 3.7.2 Energy Star Transformers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-12 3.7.3 Consortium for Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13 3.7.4 Federal Energy Management Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13 3.7.5 Efficiency Vermont . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13 3.7.6 Idaho Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-14 3.7.7 National Grid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-14 3.7.8 NHSaves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-14 3.7.9 Northeast Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-15 3.7.10 Seattle City Light . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-15 3.7.11 Tacoma Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-16 3.7.12 Two Rivers Water and Light . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-16 3.7.13 United Illuminating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-16 3.7.14 Wisconsin Public Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-17 3.7.15 Xcel Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-17 3.8 REGULATORY PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-17 3.8.1 Arizona Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-18 3.8.2 California Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-18 3.8.3 Connecticut Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-18 3.8.4 Maryland Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-18 3.8.5 Massachusetts Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-18 3.8.6 Minnesota Procurement Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . 3-20 3.8.7 New Jersey Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-20 3.8.8 New York Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-20 3.8.9 Oregon Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-20 3.8.10 Rhode Island Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-20 3.8.11 Washington Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-21 3.8.12 Wisconsin Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-21 3.8.13 Burlington, Vermont Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-21 3.8.14 Proposed State Efficiency Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-21 3.8.15 U.S. National Energy Bill - EPACT 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-22 3.8.16 Canadian Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-223-ii

3.8.17 Mexican Efficiency Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-25 3.9 TECHNOLOGY ASSESSMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-30 3.9.1 Distribution Transformer Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-31 3.9.2 Transformer Efficiency Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-31 3.9.3 Transformer Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-33

LIST OF TABLES Table 3.3.1 Distribution Transformer Product Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2 Table 3.4.1 National Distribution Transformer Shipme nt Estimates for 2001 . . . . . . . . . . . 3-4 Table 3.7.1 NEMA Efficiency Levels for Liquid-Immers ed Distribution Transformers . . 3-11 Table 3.7.2 NEMA Efficiency Levels for Dry-Type Distribution Transformers . . . . . . . . 3-12 Table 3.7.3 Efficiency Vermont Rebate Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13 Table 3.7.4 National Grid Design 2000 Rebate Amounts . . . . . . . . . . . . . . . . . . . . . . . . . 3-14 Table 3.7.5 NHSaves’ New Equipment and Construction Program Rebate Amounts . . . . 3-15 Table 3.7.6 Northeast Utilities Energy Conscious Con struction Rebate Amounts . . . . . . . 3-15 Table 3.7.7 Tacoma Power Transformer Rebate Amounts . . . . . . . . . . . . . . . . . . . . . . . . . 3-16 Table 3.7.8 United Illuminating Transformer Rebate A mounts . . . . . . . . . . . . . . . . . . . . . 3-17 Table 3.8.1 Comparison of Massachusetts State EnergyEfficiency Standards for MV DryType Distribution Transformers to DOE NOPR TSLs . . . . . . . . . . . . . . . . . . 3-19 Table 3.8.2 Canadian Efficiency Regulations for Dry- Type Transformers . . . . . . . . . . . . 3-25 Table 3.8.3 Characteristics of Regulated Distributio n Transformers in Mexico . . . . . . . . 3-26 Table 3.8.4 Minimum Efficiency Levels for Transforme rs in Mexico . . . . . . . . . . . . . . . . 3-27 Table 3.8.5 Maximum Allowed Losses for Transformers in Mexico . . . . . . . . . . . . . . . . . 3-28 Table 3.8.6 Transitional Standards for Small Manufac turers in Mexico . . . . . . . . . . . . . . 3-29 Table 3.8.7 Transitional Maximum Losses for Small Manufacturers in Mexico . . . . . . . . 3-30 Table 3.9.1 Options and Impacts of Increasing Transf ormer Efficiency . . . . . . . . . . . . . . 3-34

LIST OF FIGURES Figure 3.4.1 Liquid-Immersed Distribution Transforme r Shipment Estimate, 2001 . . . . . . . 3-3 Figure 3.4.2 MV Dry-Type Distribution Transformer Sh ipment Estimate, 2001 . . . . . . . . . 3-4 Figure 3.5.1 Market Delivery Channels for Distributi on Transformers . . . . . . . . . . . . . . . . . 3-7 Figure 3.9.1 Transformer Losses Vary with Load (75 kVA Dry-Type) . . . . . . . . . . . . . . . . 3-32 Figure 3.9.2 Transformer Efficiency Varies with Load . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-333-1 CHAPTER 3. MARKET AND TECHNOLOGY ASSESSMENT

3.1 INTRODUCTION This chapter provides a profile of the distributiontransformer industry in the United States. The Department developed the preliminary m arket and technology assessment presented in this chapter primarily from publicly available i nformation. This assessment is helpful in identifying the major manufacturers and their produ ct characteristics, which form the basis for the engineering and the life-cycle cost (LCC) analy ses.

3.2 DISTRIBUTION TRANSFORMER DEFINITION The Energy Policy Act (EPACT) of 2005 established the definition of a distribution transformer as follows:

The term 'distribution transformer' means a transfo rmer that - (i) has an input voltage of 34.5 kilovolts or less; (ii) has an output voltage of 600 volts or less; and (iii) is rated for operation at a frequency of 60 He rtz. The term 'distribution transformer' does not includ e - (i) a transformer with multiple voltage taps, the hi ghest of which equals at least 20 percent more than the lowest; (ii) a transformer that is designed to be used in a special purpose application and is unlikely to be used in general purpose applicati ons, such as a drive transformer, rectifier transformer, auto-transforme r, impedance transformer, regulating transformer, sealed and non-ventilating transformer, machine tool transformer, welding transformer, grounding transfo rmer, or testing transformer; or (iii) any transformer not listed in clause (ii) that is excluded by the Secretary by rule because - (I) the transformer is designed for a special applic ation; (II) the transformer is unlikely to be used in gener al purpose applications; and (III) the application of standards to the transforme r would not result in significant energy savings. The term ‘low-voltage dry-type distribution transfo rmer’ means a distribution transformer that— (A) has an input voltage of 600 volts or less; (B) is air-cooled; and (C) does not use oil as a coolant. The term ‘transformer’ means a device consisting of 2 or more coils of insulated wire that transfers alternating current by electromagnetic in duction from 1 coil to another to change the original voltage or current value.3-2

3.3 PRODUCT CLASSES The Department divides covered products into classe s by: (a) the type of energy used; (b) capacity; and (c) performance-related features that affect consumer utility or efficiency. Different energy efficiency standards may apply to different product classes. In the advance notice of proposed rulemaking (ANOPR), the Departme nt proposed 10 product classes, and received general support on these product classes. The 10 product classes divided up the population of distribution transformers by: a) Type of transformer insulation - liquid-immersed or dry-type, b) Number of phases - single or three, c) Voltage class - low or medium (for dry-type unit s only), and d) Basic impulse insulation level (for medium-volta ge, dry-type units only). On August 8 th , 2005, the President signed into law EPACT 2005, w hich contained a provision establishing energy conservation standard s for two of the Department’s product classes (PCs)—PC3, low-voltage, single-phase, dry-type and PC4, low-voltage, three-phase, dry-type. With standards thereby established for low-voltage, dry-type distribution transformers, the Department is no longer considering these two produ ct classes for standards. Table 3.3.1 below presents the eight product classes that remain with in the scope of this rulemaking analysis, and provides the kilovolt-ampere (kVA) range associated with each.

Table 3.3.1 Distribution Transformer Product Classes PC # * Insulation Voltage Phase BIL Rating kVA Range PC1 Liquid-Immersed Medium Single - 10-833 kVA PC2 Liquid-Immersed Medium Three - 15-2500 kVA PC5 Dry-Type Medium Single 20-45kV BIL 15-833 kVA PC6 Dry-Type Medium Three 20-45kV BIL 15-2500 kVA PC7 Dry-Type Medium Single 46-95kV BIL 15-833 kVA PC8 Dry-Type Medium Three 46-95kV BIL 15-2500 kVA PC9 Dry-Type Medium Single > 96kV BIL 75-833 kVA PC10 Dry-Type Medium Three > 96kV BIL 225-2500 kVA * Note: PC3 and PC4 were the product classes for lo w-voltage, dry-type transformers, which were remove d from this rulemaking when EPACT 2005 became law. For consist ency with prior Notices and to maintain schedule, the Department did not renumber the liquid-immersed andmedium-voltage, dry-type product classes. Basic impulse insulation levels (BIL) refer to the level of insulation wound into a transformer, dictating its design voltage. General ly, higher BIL ratings have lower transformer operating efficiencies because the additional insul ation and necessary clearances increase the distance between the core steel and the windings, c ontributing to higher losses. In addition, as the overall size of the windings increases due to a dditional insulation surrounding each wire, the core window through which the windings pass must in crease, creating a larger core and increasing losses in the core. Recognizing this important aspect of transformer design, and after consultation with industry experts, the Department determined that differentiation of the energy3-3

efficiency standards by BIL level would be necessar y for medium-voltage (MV), dry-type units, since these transformers experience significant var iability in efficiency due to their BIL ratings. This decision is consistent with NEMA’s TP 1-2002 ( described in section 3.7.1).

3.4 NATIONAL SHIPMENT ESTIMATE To prepare an estimate of the national impact of en ergy conservation standards for distribution transformers, the Department needed to estimate annual transformer shipments. For accuracy in this calculation, unit shipments were r equired by product class and kVA rating within each product class. Detailed shipment information like this is highly sensitive to manufacturers, many of whom indicated to the Department they would not able to disclose their shipments. The Department researched public sources of transformer shipment information, such as the data compiled by the U.S. Census Bureau, but found that the data are aggregated, with many kVA ratings bundled in one value. Thus, the Department determined that it would not be possible to create an accurate estimate of transformers by kVA rating using Census Bureau data. Instead, to develop its shipments estimate, the Dep artment contracted a company with considerable knowledge of the U.S. transformer indu stry. This contractor has collectively more than 80 years of experience working in both the liq uid-immersed and medium-voltage, dry-type transformer industry in the U.S. The Department ta sked the contractor with using its knowledge of the market, plus a limited number of consultativ e calls, to compile a national estimate of shipments for liquid-immersed and medium-voltage, dry-type transformers. Figures 3.4.1 and 3.4.2 present the total aggregate shipment estimates for liquidimmersed and medium-voltage, dry-type units. These pie charts show the estimated shipments for 2001 in both number of transformers and cumulat ive megavolt-ampere (MVA) of transformer capacity. The superclasses are subdivided into two principal groups—single-phase and threephase. A detailed breakdown of the shipment estimates by product class and kVA rating appears in the shipments analysis (Chapter 9 of this TSD).

SinglePhaseThreePhase

Units Shipped SinglePhaseThreePhase MVA Shipped

Figure 3.4.1 Liquid-Immersed Distribution Transforme r Shipment Estimate, 20013-4

Table 3.4.1 presents the actual shipment estimates by product class and the estimated value of these shipments, approximately $1.3 billio n in 2001. Table 3.4.1 National Distribution Transformer Shipme nt Estimates for 2001 Distribution Transformer Product Class Units Shipped MVA Capacity

Shipped Shipment Value

(2001 US$million) Liquid-immersed, medium-voltage, single-phase 977,38 8 36,633 698.8 Liquid-immersed, medium-voltage, three-phase 79,367 4 2,887 540.4 Dry-type, medium-voltage, single-phase, 20-45 kV BI L 119 18 0.5 Dry-type, medium-voltage, three-phase, 20-45 kV BIL 650 776 13.5 Dry-type, medium-voltage, single-phase, 46-95 kV BI L 121 22 0.6 Dry-type, medium-voltage, three-phase, 46-95 kV BIL 2,371 3,913 68.1 Dry-type, medium-voltage, single-phase, > 96 kV BIL 20 4 0.1 Dry-type, medium-voltage, three-phase, > 96 kV BIL 187 367 6.4 Total 1,060,224 84,621 1,328 Overall, liquid-immersed distribution transformers are a much larger market segment than MV dry-type. On a unit basis, 1,056,756 liquid-imm ersed units were shipped compared to just 3,468 MV dry-type units. On an MVA shipped basis, liquid-immersed were 94 percent of the capacity shipped in 2001, compared to 6 percent for MV dry-type. Within the liquid-immersed market, single-phase dis tribution transformers dominate the unit-shipments, comprising 92 percent of the shipme nts in 2001. However, on an MVA capacity shipped basis, three-phase units dominate, represen ting 54 percent of the liquid-immersed capacity sold in 2001. For the medium-voltage, dry -type market, three-phase distributionSinglePhase

ThreePhase Units Shipped SinglePhase

ThreePhase MVA Shipped

Figure 3.4.2 MV Dry-Type Distribution Transformer Sh ipment Estimate, 2001a

This estimate is based on a review of the Thomas Business Registry (June 2005), United Laboratories (UL) Listings (June 2005), Canadian Standards Association (CSA) L istings (June 2005), Factory Mutual (FM) Listings ( June 2005), the ORNL contact database from the Determination An alysis, 1 and participants in DOE’s Distribution Transformer s Framework Workshop meeting held November 1, 2000 in Washington, DC. 3-5 transformers dominate, representing 93 percent of the unit shipments and 99 percent of the MVA capacity shipped in 2001. In preparing its estimates of the distribution tran sformer market, the Department’s contractor identified differences between its 2001 shipment estimates and the Oak Ridge National Laboratory (ORNL) Determination Analysis s hipment estimates for 1995. 1 The differences and the understanding behind some of th ese differences are discussed below. 1. Compared to 1995, the 2001 shipment data suggest that more single-phase, liquidimmersed transformers were purchased as pad-mounts in 2001 than in 1995. Total single-phase, liquid-immersed transformer shipments remained close to the traditional one million units per year; however, the average kV A size has risen in both pole- and pad-mounted transformers by approximately 10 percen t between 1995 and 2001. 2. The three-phase, liquid-immersed transformer mark et was considerably larger in 2001 than in 1995. This difference could be attributed to a more robust commercial and industrial expansion in 2001 compared to 1995. 3. The three-phase, medium-voltage, dry-type transfo rmer market was smaller in volume than ORNL determined in 1995, but with larger kVA r atings. These larger three-phase, medium voltage, dry-type distribution transformers are most commonly used inside commercial and industrial buildings when power requ irements are sufficiently large that direct feed from a liquid-immersed external transfo rmer would be uneconomical.

3.5 MANUFACTURERS OF DISTRIBUTION TRANSFORMERS In total, there are more than 60 manufacturers and importers of distribution transformers operating in the U.S. today. aOf these, 16 major companies represent about 80 p ercent of both the liquid-immersed and medium-voltage, dry-type markets. From a manufacturing point of view, the six largest companies operating in the liquid-immersed distribution transformer market are (in alphabetical order): ABB Power T&D Company, Cooper Power Systems, ERMCO, General Electric Power Systems, Howard Industries, and Kuhlman Electric Corporation. Together, these six companies represent more than 80 percent of the sales revenue of liquid-imme rsed distribution transformers in the U.S. For medium-voltage, dry-type distribution transform er manufacturers, the seven largest companies operating in the U.S. include (in alphabe tical order): ABB Power T&D Company, Eaton Electrical, Inc., Federal Pacific Transformer Company, General Electric, Olsun Electrics Corporation, Siemens Corporation, and Square D Comp any. Together, these companies3-6

represent more than 80 percent of the sales revenue of medium-voltage, dry-type distribution transformers in the U.S. 3.5.1 Small Business Impacts The Department considered the possibility of small businesses being impacted by the promulgation of minimum efficiency standards for di stribution transformers. The Department is aware that there are small distribution transformer manufacturers, defined by the Small Business Administration as having 750 employees or fewer, wh o would be impacted by a minimum efficiency standard. The Department studied the po tential impacts to these small businesses in greater detail during the manufacturer impact analy sis (MIA), which it conducted as part of the notice of proposed rulemaking (NOPR) analysis. Following the MIA, the Department concluded that sm all businesses may be adversely impacted by an energy conservation standard due to the incremental magnitude of capital investment for transformer manufacturing equipment. Distribution transformer manufacturers may be required to purchase additional core-cuttingmachines, coil winding machines, annealing furnaces, or other necessary equipment due to the i ncreased size of more energy-efficient distribution transformers. Many small businesses d o not possess the capital needed to purchase this additional equipment. There are a limited number of producers of distribution transformer manufacturing equipment, therefore the cost of suchequipment is generally equivalent for all distribution transformer manufacturers. Chapter 12 , describing the MIA, addresses impacts on small businesses in greater detail.

3.5.2 Distribution and Sales Channels

A schematic of the structure of the distribution tr ansformer market is shown in Figure 3.5.1. 1 This illustration depicts the major market player s and the level of interaction between them. The solid lines show more common distributio n and sales channels and dashed lines less frequently used channels.3-7 Used Transformers or Repair Shops

Distribution Transformer Manufacturers Dry-type • Ventilated • Cast Liquid-filled • Oil • Silicone • R-Temp Manufacturers’ Representative Stocking Distributor Electrical Contractor Industrial and Commercial Users

Electric Utilities (Large User or Custom Order) End User

Agents for End User (A&E or Contractor) OEMs

Figure 3.5.1 Market Delivery Channels for Distributi on Transformers

Source: ORNL, Determination Analysis of Energy Conservation Stand ards for Distribution Transformers , 1996. The market delivery channel for electric utilities is generally direct, with the majority of these customers placing orders directly with manufa cturers. It is estimated that electric utilities purchase over 90 percent of their distribution tran sformers directly from manufacturers, specifying their desired features and performance. 1 There are also utilities, such as some rural cooperatives and municipalities, that make transfor mer purchases through distributors. When placing an order, the electric utility provides a s pecification, including the value it places on future core and coil losses over the life of the tr ansformer (see section 3.6 for a discussion of tota l owning cost). This market dynamic leads manufactur ers to develop custom designs in their contract bid, reflecting the customer’s performance requirements and the dynamic costs of material, equipment, and labor at a transformer manufacturer’s facility. The delivery channel for commercial and industrial customers can be complex, working through intermediaries such as stocking distributor s and electrical contractors. Electrical contractors typically purchase transformers using s pecifications written by themselves or by agents. Some larger industrial customers buy trans formers directly from distributors or manufacturers based on specifications drafted by in -house experts. Any large-volume or customorder purchases made (e.g., orders from the petroch emical or the pulp and paper industry) are typically made directly with transformer manufactur ers. Similarly, original equipment manufacturers (OEMs) know the exact specification they require for their finished products and typically work directly with manufacturers when pla cing an order. Transformers with major damage are usually replaced rather than repaired. However, when a repair does take place (e.g., when failure o ccurs within the warranty period), it may be carried out by a repair shop or at the manufacturer ’s facility. Additionally, some utilities may3-8

choose to carry out their own repairs if this optio n is less expensive than disposal and replacement. 3.5.3 Import Duties on Core Steel Import duties are applied to electrical core steels imported as raw material from Japan and Italy. This duty is levied at the port of entry, and amounts to a 31 percent anti-dumping duty. Generally, domestic suppliers are able to offer equ ivalent specification core steels without the duty. However, one particular type of steel manufa ctured by Nippon Steel Corporation in Japan is patented, and is not available to U.S. transform er manufacturers without the 31 percent duty. This electrical steel, known as ZDMH, is a high-per meability, mechanically-scribed electrical steel, with lower losses than conventional core ste els. The mechanical scribing process reduces the losses, making it the most efficient convention al core steel for wound-core construction. In the Department’s analysis, this material is used inthe liquid-immersed superclass. Mexico and Canada do not apply this 31 percent impo rt duty to electrical steel, enabling manufacturers in these neighboring countries to pro duce transformers with ZDMH at a lower cost (the steel is not taxed if incorporated into a finished product). Thus, manufacturers in these countries have a competitive cost advantage of 31 p ercent on core steel, the most expensive part of a distribution transformer. The Department cons idered a dual-price point for this steel in the ANOPR analysis— a U.S. manufacturer’s price and a M exican/Canadian manufacturer’s price. For the NOPR analysis, the Department modeled a ZDM H core manufactured in Mexico or Canada and then subsequently imported into the U.S. for transformer assembly (thereby avoiding the tariff). The Department modeled the ZDMH core in this way for the NOPR because it received information indicating that this would be the most likely scenario for ZDMH core manufacturing. The MIA chapter discusses the effec t of this scenario on U.S. transformer manufacturer employment.

3.6 TOTAL OWNING COST EVALUATION In 1995, there were an estimated 44 million liquid- immersed distribution transformers in service, of which approximately 90 percent were own ed by electric utilities. 1 For dry-type transformers, there were approximately 12 million units in service, which were primarily used by commercial and industrial customers. 1 The liquid-immersed market, dominated by the elec tric utility sector, drove efficiency ratings higher ove r time, encouraging more efficient materials and manufacturing methods. A detailed discussion of th ese improvements and efficiency trends between the years 1950 and 1993 can be found in two ORNL reports. 1, 2 Following the energy price shocks of the 1970s, uti lities started using total owning cost (TOC) evaluation formulae (Equation 3.1), incorporating core and winding losses into their purchasing decisions. The TOC consists of the quot ed transformer price and energy losses in the core and winding over the anticipated life of the unit.3-9

Expressed as a formula,

TOC = (NL × A) + (LL × B) + Price Eq. 3.1

where:

TOC

= total owning cost ($), NL = no-load loss (Watts), A = equivalent first-cost of no-load losses ($/Watt), LL = load loss at the transformer’s rated load (Watts) , B = equivalent first-cost of load losses ($/Watt), an d Price = bid price (retail price)($). The capitalized cost per watt of no-load and load l osses, the A and B factors, vary from one electric utility to another. They are derived from several variables, including the avoided costs of system capacity, generation capacity, tran smission and distribution capacity and energy, the levelized fixed charge rate, the peak responsib ility factor, the transformer loss factor, and the equivalent annual peak load. 3 For a detailed discussion on the development and use of the TOC formula, including examples, see the draft industry standard document, Institute of Electrical and Electronics Engineers, Inc. (IEEE) PC57.12.33. Utilities that use A and B factors compare two or m ore proposals from manufacturers and select the one that offers them the lowest total owning cost—i.e., the lowest combination of first cost and operating cost over the life of the transf ormer. Before electric utility deregulation started in North America, 30 years was considered the operating life and the depreciation period of a liquid-immersed transformer. In the last five years, deregulation has raised concerns about payback periods, since electric utilities are not s ure if they will own the transformer for its entire life. This uncertainty has forced some electric ut ilities to reduce their A and B factors, equating to a decreased emphasis on losses, and therefore a reduction in transformer efficiency ratings. In 1996, ORNL estimated that “more than 90 percent” of electric utilities used the TOC method of loss evaluation at the time of purchase, which drove the market toward increasingly efficient designs. 1 More recently, however, the possibility of deregu lation and the associated sale of distribution networks has meant that utilities p urchasing transformers today may not own them in 5 or 10 years, and thus will not recover the hig her initial cost of a more efficient design. These regulatory changes and the general uncertainty surr ounding deregulation have driven some utilities to purchase designs with lower first cost s and higher losses. The IEEE draft standard PC57.12.33 has a chapter di scussing transformer efficiency for commercial and industrial customers 3 (i.e., typical users of medium-voltage, dry-type transformers). The medium-voltage, dry-type transf ormer market functions similarly to the liquid-immersed market, in that manufacturers recei ve custom-build orders with specifications or design criteria from the customer. Because these c ustomers pay for (and are concerned about) the electricity lost in their own distribution syst ems, they are concerned about the performance of the transformers they order.3-10

3.7 VOLUNTARY PROGRAMS The Department reviewed several voluntary programs promoting efficient distribution transformers in the United States. These include the National Electrical Manufacturers Association (NEMA) TP 1 Standard, the U.S. Environm ental Protection Agency’s Energy Star Transformers program, the Consortium for Energy Eff iciency’s Commercial and Industrial Transformers Initiative, and the Federal Energy Man agement Program’s TP 1 purchase program. The Department also reviewed several voluntary prog rams operating at a regional level that affect distribution transformers, including Efficie ncy Vermont, Idaho Power, National Grid, NHSaves, Northeast Utilities, Seattle City Light, T acoma Power, Two Rivers Water and Light, United Illuminating, Wisconsin Public Power and Xce l Energy. Because the national standard for low-voltage, dry-type distribution transformers is taking effect on January 1, 2007, many of these programs will cease to exist in 2007. Howeve r, at this time, these are the active voluntary programs working to accelerate the transformation o f the market toward more energy-efficient designs.

3.7.1 National Electrical Manufacturers Association TP 1 Standard The NEMA TP 1 standard establishes a voluntary effi ciency standard for distribution transformers. 4 It encompasses liquid-immersed distribution trans formers, single- and threephase, as well as dry-type, low-voltage and medium- voltage, single- and three-phase units. NEMA established this national voluntary efficiency standard in 1996, and revised it in 2002. Manufacturers must meet or exceed the minimum effic iency targets presented in Tables 3.7.1 and 3.7.2 at the appropriate loading points. TP 1 effi ciency levels are adopted by States and other agencies that are interested in establishing a stan dard. At the national level, Congress established TP 1 as the standard for low-voltage dry-type trans formers (EPACT 2005, August 8 th , 2005). More information about TP 1 can be obtained by cont acting NEMA, tel: 703-841-3200, or by visiting http://www.nema.org/stds/tp1.cfm#download.3-11

Table 3.7.1 NEMA Efficiency Levels for Liquid-Immers ed Distribution Transformers

Liquid-Immersed, Single-Phase Liquid-Immersed, Three -Phase kVA Min Efficiency (%) kVA Min Efficiency (%) 10 98.3 15 98.0 15 98.5 30 98.3 25 98.7 45 98.5 37.5 98.8 75 98.7 50 98.9 112.5 98.8 75 99.0 150 98.9 100 99.0 225 99.0 167 99.1 300 99.0 250 99.2 500 99.1 333 99.2 750 99.2 500 99.3 1000 99.2 667 99.4 1500 99.3 833 99.4 2000 99.4 - - 2500 99.4 Notes: Temperature: load-loss 85oC, no-load loss 20o C Efficiency levels at 50 percent of unit nameplate l oad3-12

Table 3.7.2 NEMA Efficiency Levels for Dry-Type Dist ribution Transformers

Dry-Type, Single-Phase Dry-Type, Three-Phase

kVA Min Efficiency (%)

kVA Min Efficiency (%)

LowVoltage Medium-Voltage LowVoltage Medium-Voltage

< 60 kV BIL >60 kV BIL < 60 kV BIL > 60kV BIL 15 97.7 97.8 97.6 15 97.0 97.2 96.8 25 98.0 98.1 97.9 30 97.5 97.6 97.3 37.5 98.2 98.3 98.1 45 97.7 97.8 97.6 50 98.3 98.4 98.2 75 98.0 98.1 97.9 75 98.5 98.5 98.4 112.5 98.2 98.3 98.1 100 98.6 98.6 98.5 150 98.3 98.4 98.2 167 98.7 98.8 98.7 225 98.5 98.5 98.4 250 98.8 98.9 98.8 300 98.6 98.6 98.5 333 98.9 99.0 98.9 500 98.7 98.8 98.7 500 - 99.1 99.0 750 98.8 98.9 98.8 667 - 99.2 99.0 1000 98.9 99.0 98.9 833 - 99.2 99.1 1500 - 99.1 99.0 - - - - 2000 - 99.2 99.0 - - - - 2500 - 99.2 99.1 Notes: Temperature: 75oC for both low- and medium-vo ltage Low-voltage efficiency levels at 35 percent of unit nameplate load Medium-voltage efficiency levels at 50 percent of u nit nameplate load

3.7.2 Energy Star Transformers The U.S. Environmental Protection Agency (U.S. EPA) and DOE manage a program called Energy Star Transformers to overcome market barriers preventing industrial/commercial customers and utilities from purchasing more energy -efficient, dry-type, low-voltage, single- and three-phase units. The minimum efficiency that a transformer must meet or exceed to be classified as an Energy Star transformer is the sam e as NEMA’s TP 1. The activities of this program include use of the Energy Star label, marke ting assistance to manufacturers and distributors, and free software tools for end users (including a downloadable cost evaluation model and an energy-efficiency calculator). This p rogram is sponsored and promoted by the U.S. EPA and DOE, with additional promotional support fr om the Consortium for Energy Efficiency (CEE). For more information about this program, pl ease contact the U.S. EPA tel: 1-888-STARYES or CEE, tel: 617-589-3949.3-13

3.7.3 Consortium for Energy Efficiency The CEE’s Commercial and Industrial Transformers In itiative, launched in 1997, promotes the manufacture and sale of high-efficienc y transformers. Partnering with the Energy Star Transformers Program, CEE and participating me mbers promote high-efficiency performance guidelines for low-voltage distributiontransformers specified by the NEMA TP 1 standard. CEE members and other participating organizations include electric utilities, and statewide or regional efficiency organizations, whi ch may be utility-based. CEE published an Initiative Description and Market Assessment , which identifies the transformer market barriers to efficiency for interested utilities and other organ izations. For more information, contact Ted Jones at tel: 617-589-3949, ext. 230. 3.7.4 Federal Energy Management Program The Department manages the Federal Energy Managemen t Program (FEMP), which helps Federal buyers identify and purchase energy-efficie nt equipment, including distribution transformers. The FEMP standard for distribution transformers is based on the NEMA TP 1 standard, and includes all units listed in TP 1. F EMP offers buyers support tools such as efficiency guidelines, cost-effectiveness examples, and a cost calculator. FEMP also offers training, on-site audits, demonstrations, and desig n assistance. For more information, interested stakeholders can contact FEMP at tel: 1-800-363-373 2. 3.7.5 Efficiency Vermont Efficiency Vermont, an organization offering techni cal assistance and financial incentives to encourage energy efficiency in the State of Verm ont, offers rebates for Energy Star three-phase, low voltage, dry-type transformers mee ting the NEMA TP 1 standard. 5 The maximum rebate amounts are presented in Table 3.7.3 . Efficiency Vermont also provides simple payback calculations for various transformer sizes, and a comparison of the life-cycle cost for a dry-type, low voltage 225 kVA standard transformer and an Energy Star 225 kVA transformer. For more information, contact Efficiency Vermont at tel: 802-860-4095. Table 3.7.3 Efficiency Vermont Rebate Amounts Dry-Type, Low-Voltage, Three-Phase kVA Maximum incentive per unit kVA Maximum incentive p er unit 15 $250 112.5 $500 30 $275 150 $700 45 $400 225 and higher $1200 75 $450 - -3-14

3.7.6 Idaho Power Idaho power manages the Industrial Efficiency Progr am, which aims to encourage and assist large commercial and industrial customers inthe use of high-efficiency transformers. Financial incentives are offered for any project th at results in kWh savings. Projects are evaluated on a case-by case basis and take into acc ount existing loads on both sides of the transformer to calculate transformer losses under a ctual operating conditions. These values are compared with those of the new transformer under si milar loading conditions. The difference in the transformer losses multiplied by the operating hours gives an approximation of kWh savings. Financial incentives include $0.12 per annual kWh s aved, or 50 percent of the project cost. Between the two incentives, the lesser of the two w ill be awarded. Idaho Power also provides energy-efficient education, project monitoring and verification, and energy-efficient demonstration projects. For more information, cont act Idaho Power at tel: 208-388-2200.

3.7.7 National Grid National Grid manages the Design 2000 Plus Program, which works to promote energy efficiency in design and construction practices in new and renovated commercial and industrial buildings. 6 The target equipment of this program is NEMA TP 1 dry-type, low-voltage, threephase units. The program offers rebates in Rhode I sland territories (the participating utility is Narragansett Electric). These rebates cover 75 per cent of a compliant transformer's incremental cost over the least expensive TP 1 model, or they b uy down the unit cost until it offers a 1.5-year payback. The maximum rebate amounts are presented in Table 3.7.4. The program also offers training for transformer specifiers and provides marketing activities to promote Energy Star units. For more information, contact National Grid at tel: 508-389-2000. Table 3.7.4 National Grid Design 2000 Rebate Amounts Dry-Type, Low-Voltage, Single-Phase kVA Maximum incentive per unit kVA Maximum incentive p er unit 15 $130 112.5 $520 30 $190 150 $560 45 $250 225 $1150 75 $440 - -

3.7.8 NHSaves The NHSaves Program is a collaborative of New Hamps hire’s electric utilities that aims to promote energy efficiency, while advancing the e conomy of the state. 7 NHSaves’ New Equipment and Construction Program offers incentive s for the installation of NEMA TP 1 dry-type, low-voltage, three-phase distribution transformers in commercial/industrial new construction or renovations. The maximum rebate am ounts available are presented in Table 3.7.5. For more information, contact the Public Se rvice of New Hampshire at tel: 1-800-662-7764, Granite State Electric Company (GSE Co) at tel: 1-800-322-3223, New3-15

Hampshire Electric Cooperative (NHEC) at tel: 1-800 -698-2007, or Unitil Energy Systems, Inc. at tel: 1-888-886-4845. Table 3.7.5 NHSaves’ New Equipment and Construction Program Rebate Amounts Dry-Type, Low-Voltage, Three-Phase kVA Maximum incentive per unit kVA Maximum incentive p er unit 15 $130 112.5 $520 30 $190 150 $560 45 $250 225 $1150 75 $440 - -

3.7.9 Northeast Utilities Northeast Utilities manages the Energy Conscious Co nstruction Program, which provides incentives to builders and contractors to support the purchase of energy-efficient transformers. 8 The target equipment of this standard are NEMA TP 1 dry-type, low-voltage, three-phase distribution transformers. The program focuses its efforts on projects within the customer area of Northeast Utilities, covering 70 to 100 percent of the additional incremental cost for a TP 1 transformer, depending on measured energy savings. The maximum rebate amounts available are presented in Table 3.7.6. For more information , contact Northeast Utilities at tel: 1-800-286-5000. Table 3.7.6 Northeast Utilities Energy Conscious Con struction Rebate Amounts Dry-Type, Low-Voltage, Three-Phase kVA Maximum incentive per unit kVA Maximum incentive p er unit 15 $640 150 $1140 30 $480 225 $1440 45 $570 300 $1800 75 $670 500 $2550 112.5 $700 - -

3.7.10 Seattle City Light Seattle City Light manages the Energy Smart Service s Custom Incentive Program. 9 The program provides incentives for distribution transf ormers that exceed the State-mandated NEMA TP-1 future standards for low voltage, dry-type dis tribution transformers. The standards were mandated through An Act Relating to Energy Efficien cy, which becomes effective on January 1, 2007 in Washington State. Incentives provided cove r up to 70 percent of the cost for qualifying equipment, or $0.23 per kWh saved. Usually incenti ves are applied to utility-owned equipment. For more information contact Seattle City Light at tel: 206-684-3000.3-16

3.7.11 Tacoma Power Tacoma Power manages a Transformer Rebate Program, offering rebates to their commercial and industrial customers who choose to i nstall Energy Star-qualified distribution transformers. 10 This program applies to NEMA TP 1 dry-type, low-v oltage, three-phase distribution transformers. The incentives are offe red until January 1, 2007, at which point the NEMA TP 1 standard will be mandated by An Act Relat ing to Energy Efficiency. The maximum rebate amounts available are presented in Table 3.7 .7. For more information, contact Tacoma Power at tel: 253-502-8619.

Table 3.7.7 Tacoma Power Transformer Rebate Amounts Dry-Type, Low-Voltage, Three-Phase kVA Maximum incentive per unit kVA Maximum incentive p er unit 15 $210 112.5 $665 30 $310 150 $825 45 $445 225 or higher $1810 75 $505 - -

3.7.12 Two Rivers Water and Light Two Rivers Water and Light in Wisconsin offers ince ntives for Energy Star low-voltage, dry-type transformers that meet the NEMA TP 1 effic iency standards. 11 Incentives are provided on a customized basis, based on an energy savings c alculation, project cost, and simple payback to complete installation. Two Rivers Water and Light directs its program marketing efforts at customers, electricians, and local vendors. For mo re information, contact Two Rives Water and Light at tel: 920-792-5550. 3.7.13 United Illuminating United Illuminating manages an energy-efficiency in itiative in Connecticut called the Energy Blueprint Program. 12 This program works to promote energy-efficient bu ildings and commercial equipment, including lighting; building envelope; heating, ventilation, and air conditioning (HVAC) equipment; motors; and other en ergy components of commercial and industrial systems. For transformers, Energy Bluep rint promotes Energy Star transformers. The program offers cash incentives ranging from $640 to $2,550. The maximum rebate amounts available are presented in Table 3.7.8. For more i nformation, contact United Illuminating at tel: 1-800-722-5584.3-17

Table 3.7.8 United Illuminating Transformer Rebate A mounts Dry-Type, Low-Voltage kVA Maximum incentive per unit kVA Maximum incentive p er unit 15 $640 150 $1140 30 $480 225 $1440 45 $570 300 $1800 75 $670 500 $2550 112.5 $700 - -

3.7.14 Wisconsin Public Power Wisconsin Public Power manages a program called the Energy Star Transformer Incentive, which is based on promoting the market f or Energy Star Transformers. 13 A cash incentive is provided, based on realized energy sav ings. Before purchasing a transformer, the buyer must contact one of the sponsoring electric utilities to receive a rebate for purchasing an Energy Star transformer. For more information, con tact Wisconsin Public Power at tel: (608) 834-4500. 3.7.15 Xcel Energy Xcel Energy manages the Custom Efficiency Program i n Minnesota to help reduce peak load demand of commercial and industrial customers. 14 Based on the NEMA TP 1 standard for low- and medium-voltage, dry-type distribution tran sformers, this program offers financial incentives of up to US$200 per kilowatt of average demand savings achieved during the system peak period by utilizing an energy-efficient distri bution transformer. For more information, contact Xcel Energy at tel: 1-800-328-8226.

3.8 REGULATORY PROGRAMS On August 8 th , 2005 the President signed into law EPACT 2005. T his legislation establishes the energy conservation standard for lo w-voltage, dry-type distribution transformers at the industry voluntary program level of TP 1-200 2. This Federally mandated standard will be the national standard, and will preempt any State e fficiency standards when it takes effect on January 1, 2007. Until that date, however, existin g State standards are still in effect. This section identifies those State-level regulatory pro grams of which the Department is aware, including: Arizona, California, Connecticut, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Washington, Wiscons in, and the city of Burlington, Vermont. Standards also have been proposed in Colorado, Main e, New Hampshire, Pennsylvania, and Vermont. At the international level, the Departmen t is aware of standards in both Canada and Mexico that may impact the companies servicing the North American market. Summaries of all these regulatory programs are provided in this sect ion.3-18

3.8.1 Arizona Efficiency Standard An Arizona Act Relating to Appliance and Equipment Energy Efficiency Standards was signed into law on April 25, 2005. 15 According to the law, all low-voltage, dry-type transformers sold or installed in the State must meet NEMA TP 1 efficiency levels beginning January 1, 2008. For more information, contact the Arizona House Inf ormation Desk at tel: 602-542-4221. 3.8.2 California Efficiency Standard The Title 20 Appliance Efficiency Regulations mandate that transformers manufactured after March 1, 2003 and sold in California be NEMA TP 1 compliant. 16 Title 20 was approved by the California Energy Commission in November 200 2. For more information, contact the California Energy Commission at tel: 916-654-4058. 3.8.3 Connecticut Efficiency Standard As of July 1, 2005 all low-voltage, dry-type distri bution transformers sold, offered for sale, or installed in the State of Connecticut must meet the NEMA TP 1 efficiency level. 17 The Connecticut Act Concerning Energy Efficiency Standards affects new and remodeled buildings, and is enforced by periodic inspections of distribution transformer distributors and retailers. For more information, contact the Connecticut Energy Re search and Policy Development Department at tel: 860-418-6297. 3.8.4 Maryland Efficiency Standard The Maryland Energy Efficiency Standards Act requir es that all low-voltage, dry-type distribution transformers sold or installed in the State after March 1, 2005 meet the NEMA TP 1 efficiency level. 18 This act applies to all manufacturers, wholesaler s, retailers, distributors, commercial installers, and consumers in the State. The Maryland Energy Administration intends to maintain a database on their website listing pro ducts that are in compliance with the standard. For more information, contact the Maryland Energy A dministration at tel: 1-800-735-2258. 3.8.5 Massachusetts Efficiency Standard Since December 31, 1999, Massachusetts law, under s ection 313 of the Massachusetts Electric Industry Restructuring Act of 1997, requir ed that all distribution transformers sold or installed in the State meet the NEMA TP 1 efficienc y level. 19 Since passage of this standard, transformer specifiers have become more familiar wi th TP 1 through training provided by the Massachusetts Board for Building Regulations and St andards. The standard impacts new and remodeled buildings as well as electric utilities, and is enforced by building code inspectors. In late 2005, the Massachusetts’ State government r evised the efficiency standards for single-phase and three-phase medium-voltage dry-typ e distribution transformers. In November 2005, Governor Romney signed into law a bill encomp assing a range of energy-efficiency measures. This bill included a higher standard for medium-voltage dry-type distribution transformers than was previously required. 20 These efficiency levels, which take effect on Jun e 1, 2006, are set at NEMA TP 1 plus three-tenths of a percent for all medium-voltage dry-type3-19

kVA ratings. Table 3.8.1 presents the newly enacte d Massachusetts State standards (see column labeled “Massachusetts Standard”), and compares it to the DOE’s NOPR TSLs for each kVA rating. If the Massachusetts standard falls betwee n two TSLs, the next highest TSL is reported. The table shows that by applying a constant three-t enths of a percent increase in efficiency over TP 1 establishes efficiency levels that are different than those being considered by the DOE. In fact, for the Massachusetts standard, as the kVA ratings of the transformers increase, so do the equivalent DOE TSLs. For instance, a 150 kVA transformer having a BIL rating less than or equal to 60 kV would have to me et the Department’s TSL2 under the new Massachusetts standard; while a 1500 kVA transforme r with the same BIL rating must meet a level equivalent to TSL5. Table 3.8.1 Comparison of Massachusetts State EnergyEfficiency Standards for MV

Dry-Type Distribution Transformers to DOE NOPR TSLs Medium-Voltage, Three-Phase Dry-Type Distribution T ransformers

NEMA TP 1- 2002 Massachusetts

Standard DOE TSL

Corresponding to Mass. Standard NEMA TP 1-

2002 Massachusetts

Standard DOE TSL

Corresponding to Mass. Standard

# 60 kV BIL # 60 kV BIL 20-45 kV BIL >60 kV BIL >60 kV BIL 46-95 kV B IL kVA Efficiency (%) Efficiency (%) TSL number Efficiency (%) Efficiency (%) TSL number 15 96.8 97.1 TSL2 96.8 97.1 TSL2 30 97.3 97.6 TSL2 97.3 97.6 TSL2 45 97.6 97.9 TSL2 97.6 97.9 TSL3 75 97.9 98.2 TSL2 97.9 98.2 TSL3 112.5 98.1 98.4 TSL2 98.1 98.4 TSL3 150 98.2 98.5 TSL2 98.2 98.5 TSL3 225 98.4 98.7 TSL2 98.4 98.7 TSL3 300 98.6 98.9 TSL3 98.5 98.8 TSL3 500 98.8 99.1 TSL3 98.7 99.0 TSL4 750 98.9 99.2 TSL4 98.8 99.1 TSL4 1000 99.0 99.3 TSL4 98.9 99.2 TSL4 1500 99.1 99.4 TSL5 99.0 99.3 TSL4 2000 99.2 99.5 TSL5 99.0 99.3 TSL4 2500 99.2 99.5 TSL5 99.1 99.4 TSL43-20

3.8.6 Minnesota Procurement Efficiency Standard The Minnesota Building Code requires that TP 1-comp liant transformers be installed in new and remodeled buildings for which permit applic ations were received on or after July 20, 1999. 21 This standard affects both dry-type, low- and med ium-voltage, single- and three-phase; and liquid-immersed, single- and three-phase transf ormers. The market impact for this standard is being evaluated, as the TP 1 exemption of harmon ic transformers resulted in expansion of the market for K-4 units (harmonic tolerating transform ers), which are often less efficient than the baseline transformers targeted by the State Buildin g Code. Harmonic tolerating transformers are classified as “K-type” transformers, with the numbe r after the letter K representing the severity of the harmonics the transformer can tolerate. Minnes ota has taken steps to close this apparent loophole by requiring documentation in the buildingpermit application demonstrating that a harmonic transformer is legitimately needed before it can be substituted for a transformer meeting the minimum efficiency standard. For more information, contact the Minnesota Department of Public Service, tel: 651-297-2313. 3.8.7 New Jersey Efficiency Standard On March 8, 2005, acting New Jersey Governor Richar d J. Codey signed an act concerning energy efficiency, mandating a NEMA TP 1 efficiency standard for all low-voltage, dry-type transformers sold in the State after March8, 2007 or installed in the State after March 8, 2008. 22 The New Jersey Act Concerning Energy Efficiency w ill impact new and remodeled buildings, and will be enforced by periodic inspect ions of distribution transformer distributors and retailers. For more information, contact the N ew Jersey State Legislature at tel: 609-292- 4840. 3.8.8 New York Efficiency Standard New York State adopted the TP 1 standard for commer cial buildings. 23 The Energy Conservation Construction Code of New York State fo rmally mandated the TP 1 standard starting July 2002. The Code covers dry-type, low- and medium-voltage, single- and threephase; and liquid-immersed, single- and three-phase transformers. The Code is focused on new buildings and renovations, and compliance is enforc ed by State building inspectors. For more information, contact the New York Department of State, tel: 518-474-0050. 3.8.9 Oregon Efficiency Standard The Oregon Structural Specialty Code took affect January 2005. 24 This standard requires the NEMA TP 1 efficiency level for liquid-immersed and dry-type, low- and medium-voltage, single- and three-phase, distribution transformers installed for non-process loads in nonresidential buildings. For more information, conta ct the Oregon Department of Energy, tel: 503-378-4040.3-21

3.8.10 Rhode Island Efficiency Standard The Rhode Island Energy and Consumer Savings Act of2005 mandates that all lowvoltage, dry-type distribution transformers sold or installed in the State of Rhode Island after January 1, 2007 meet NEMA TP 1 efficiency levels. 25 This standard will be enforced by periodic inspections of distribution transformer distributor s and retailers. For more information, contact the Rhode Island State Government at tel: 401-222-2 000. 3.8.11 Washington Efficiency Standard The State of Washington adopted an Act Relating to Energy Efficiency on May 6, 2005. 26 According to the law, all low-voltage, dry-type transformers sold or installed in the State must meet NEMA TP 1 efficiency levels beginning January 1, 2007. For more information, contact the Washington Legislative Hotline at tel: 1-800-56 2-6000. 3.8.12 Wisconsin Efficiency Standard The State of Wisconsin Master Specifications adopte d by the Wisconsin Department of Administration require that TP 1-compliant transfor mers be installed in all new tate facility construction and remodeling projects starting March2000. 27 This means TP 1 is not part of the state building code, but in fact applies to State f acility construction and renovation projects. The specifications cover dry-type, low-voltage, single- and three-phase distribution transformers. At present, there are no activities underway that migh t extend the TP 1 standard to commercial buildings. For more information, contact the Wisco nsin Department of Administration, tel: 608-266-3685. 3.8.13 Burlington, Vermont Efficiency Standard The 2005 Vermont Guidelines for Energy-Efficient Co mmercial Construction endorse NEMA’s TP 1 minimum efficiency standards. 28 The City of Burlington's Energy Code went a step further and adopted TP 1 as a mandatory standard within its jurisdiction. The mandatory standard took effect in Burlington in January 2001, and the voluntary, statewide standard took effect in January 2002. The distribution transform ers covered by the Burlington Energy Code and the Vermont Guidelines include dry-type, low- and medium-voltage, single- and three-phase. The inclusion of liquid-immersed transformers will be considered in the next round of code revisions. To encourage compliance and adoption, B urlington Electric is offering technical support, code training activities, and financial in centives to increase vendor and contractor awareness of the standard. For more information, c ontact the Vermont Department of Public Services, tel: 802-828-2811. 3.8.14 Proposed State Efficiency Standards The states of Colorado, Maine, New Hampshire, Penns ylvania, and Vermont were recently or are still considering NEMA TP 1 efficie ncy standards for dry-type distribution transformers.3-22

Colorado House Bill 05-1162, proposing a State stan dard of NEMA TP 1 for all lowvoltage, dry-type distribution transformers, was ve toed by Governor Bill Owens on April 28, 2005. 29 For more information, contact the Colorado House of Representative at tel: 1-800-811- 7647. Maine bill number LD 1435, proposing NEMA TP 1 stan dard for low-voltage and medium-voltage, dry-type transformers, died betweenhouses on June 9, 2005. 30 For more information, contact the Maine Office of Legislativ e Information at tel: 207-287-1692. New Hampshire SB 105-FN, introduced during the 2003 session, proposed NEMA TP 1 levels for all low-voltage, dry-type distribution transformers. 31 For more information, contact the New Hampshire Senate at tel: 603-271-2111. The State of Pennsylvania considered two bills, HB 2035 and SB 901, during their 2003–2004 session concerning the adoption of NEMA T P 1 efficiency levels for all low-voltage, dry-type distribution transformers. 32 For more information, contact the Pennsylvania Ge neral Assembly at tel: 717-787-2342. The State of Vermont is considering NEMA TP 1 stand ards for both low-voltage and medium-voltage, dry-type distribution transformers. 33 The 2005 Vermont Guidelines for Energy Efficient Commercial Construction issues the propos ed standards and was open for public comment through the end of July 2005. For more inf ormation, contact the Vermont Department of Public Service at tel: 1-800-642-3281. 3.8.15 U.S. National Energy Bill - EPACT 2005 The U.S. Congress enacted legislation requiring that low-voltage, dry-type transformers manufactured on or after, or imported into the U.S. on or after January 1, 2007, meet the NEMA TP 1 minimum efficiency standards:

LOW VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS.—The efficiency of a low voltage dry-type distribution transformer manufactured on or after January 1, 2007, shall be the Class I Efficiency Levels for distribution transformers specified in table 4–2 of the ‘Guide for Determining Energy Efficiency for Distribution Transformers’ published by the National Electrical Manufacturers Association (NEMA TP–1–2002). This standard level preempts the Department’s rulem aking analysis for low-voltage, drytype transformers (which had been part of the Depar tment’s scope at the ANOPR public meeting in 2004). For more information on EPACT 2005, cont act the Committee on Energy and Commerce, the U.S. House of Representatives, tel: 2 02-225-2927. 3.8.16 Canadian Efficiency Standard The Canadian Government regulates efficiency of dry -type transformers. 34 The regulation mandates compliance with the efficiency values list ed in Canadian Standards Association (CSA) standard C802.2-00 starting on January 1, 2005 (Can ada Gazette, April 10, 2003).3-23

Liquid-immersed distribution transformers are addre ssed by a voluntary program, which has been drafted to allow supervisory oversight by the Canad ian Government. In June 1997, the Office of Energy Efficiency at Natural Resources Canada (NRCan) announced that it intended to develop regulated min imum performance standards for transformers. These proposed regulations would aff ect interprovincial trade and transformers imported into Canada. Consultative workshops follo wed this announcement, which included discussion around harmonizing with NEMA's TP 1 leve ls. The CSA drafted and published CSA C802.2-Minimum Efficiency Values for Dry-Type Transformers, in which efficiency is measured according to a per unit loading of 35 percent for low-voltage and 50 percent for medium-voltage. The efficiency levels are the same as NEMA TP 1 except the CSA added an additional significant digit (zero) in the hundredths place. For this standard, the reference winding temperature is 75°C, as in NEMA's TP 1. As a result of the process of working with the CSA and a range of stakeholders, NRCan chose to separate the regulatory processes for liqu id-immersed and dry-type transformers. Liquid-Immersed Transformer Standards The process of regulating minimum efficiency levels for liquid-immersed transformers was stopped after several years of development. Th e CSA harmonized the Canadian standard with NEMA’s voluntary standards, selecting the rang e of regulated products, the efficiency levels, and the transformer test procedures based o n NEMA TP 1 and TP 2. However, a market analysis revealed that the liquid-immersed transfor mer market in Canada is dominated by the nine provincially operated electric utilities, eachof which had already incorporated energy efficiency into their transformer procurement pract ices. It was found that more than 95 percent of the liquid-immersed distribution transformers so ld in Canada already met the NEMA TP-1 efficiency levels. Thus, the Canadian Government decided not to continue with the development of a regulation for liquid-immersed distribution transfo rmers. Instead, the major Canadian utilities and manufacturers, through the Canadian Electricity Association (CEA), signed a voluntary agreement with NRCan. Under the terms of this agre ement, the electric utilities agreed to adopt the minimum efficiency levels based on the CSA C802 .1-00 standard when purchasing liquidfilled transformers, and to report the performance of virtually all liquid-immersed transformers installed in Canada to NRCan. NRCan will then dete rmine if the efficiency of the market is degrading and, if so, take appropriate action. Dry-Type Transformer Standards NRCan pre-published an amendment to Canada’s regulations, that includes dry-type transformers, on December 14, 2002. This amendment was published on April 23, 2003. This minimum energy performance standard for dry-type tr ansformers became effective on January 1, 2005. The regulations include a broad range of kVAratings, more than are included in NEMA TP 1 or the Department of Energy’s proposed rulemak ing on distribution transformers.3-24

A consultation forum was organized in June 2005 by NRCan with the objective of analyzing some issues pertaining to the Canadian re gulation. As a result of this focus, some changes were made to the regulation and modificatio ns proposed to the CSA C802.2 standard. Meetings were convened in July and September 2005 i nvolving of NRCan, the CSA C802.2 subcommittee, transformer manufacturers and other s takeholders to address these issues. At these meetings, some of the key changes to the dry- type transformer regulation agreed were: • Elimination of the tap range exemption, so there i s no exemption in the Canadian regulations based on a tap range. • Addition of an exemption for furnace transformers. This exemption was necessary due to the removal of the tap range exemption. Furnace tr ansformers were defined as "a three-phase step-down transformer that is designed to be connected to an electric-arc furnace, and has a delta-wye switching arrangement plus high-voltage taps for changing the level of the low voltage supplied to the furnac e."

• Exclusion of drive transformers with two or more o utput windings or a low-voltage line current larger than 1500 Amperes. This means that drive transformers designed with one output winding and a low-voltage line current less than or equal to 1500 Amperes are subject to regulation.

• Clarification that transformers with resin-cast co ils (not encapsulated cores) are covered by the regulation. The exemptions for sealed trans formers and non-ventilated transformers do not apply to resin-cast coil transf ormers. • Elimination of the minimum low-voltage values, and addition of a maximum low-voltage line current of 4000 Amperes. In addition, the following change was made to the C SA dry-type performance standard, and this change may be incorporated in the Energy Efficiency Regulations in a future amendment: • Adoption of two BIL groupings for medium-voltage dry-type transformers, consistent with the BIL groupings in NEMA TP 1-2002. At the September 2005 meeting, an amendment to the definition of a dry-type transformer was also agreed as follows: Dry-type transformer means a transformer, including a transformer that is incorporated into any other product, in which the core and coils are in a gaseous or dry compound insulating medium and that (a) is either single-phase with a capacity from 1 5 to 833 kVA or three-phase with a capacity from 15 to 7500 kVA, and (b) has a nominal frequency of 60 Hz, but does not include transformers having a rated l ow voltage line current larger than 4000 Amperes.3-25

Table 3.8.1 presents the efficiency requirement for dry-type transformers. Table 3.8.2 Canadian Efficiency Regulations for Dry- Type Transformers

Dry-Type, Single-Phase Dry-Type, Three-Phase kVA Minimum

LowVoltage, (V) 1.2 kV Class,

% eff. at 0.35 of nameplate BIL 20-150

kV, % eff. at 0.50 of nameplate kVA MinimumLowVoltage, (V) 1.2 kV

Class, % eff. at 0.35 nameplate BIL 20-150

kV, % eff. at 0.50 of nameplate 15 120 / 240 97.70 97.60 15 208Y/120 97.00 96.80 25 120 / 240 98.00 97.90 30 208Y/120 97.50 97.30 37.5 120 / 240 98.20 98.10 45 208Y/120 97.70 97.60 50 120 / 240 98.30 98.20 75 208Y/120 98.00 97.90 75 120 / 240 98.50 98.40 112.5 208Y/120 98.20 98.10 100 120 / 240 98.60 98.50 150 208Y/120 98.30 98.20 167 120 / 240 98.70 98.70 225 208Y/120 98.50 98.40 250 120 / 240 98.80 98.80 300 208Y/120 98.60 98.50 333 120 / 240 98.90 98.90 500 208Y/120 98.70 98.70 500 480 - 99.00 750 208Y/120 98.80 98.80 667 480 - 99.00 1000 208Y/120 98.90 98.90 833 480 - 99.10 1500 480Y/277 - 99.00 - - - - 2000 480Y/277 - 99.00 - - - - 2500 480Y/277 - 99.10 - - - - 3000 600Y/347 - 99.10 - - - - 3750 4160Y/2400 - 99.20 - - - - 5000 4160Y/2400 - 99.20 - - - - 7500 4160Y/2400 - 99.20

3.8.17 Mexican Efficiency Standard Mexico is one of the regional leaders in promoting and regulating energy efficiency. In recent years, other countries, such as Argentina, E cuador, and Peru, have requested assistance from Mexico in the development and implementation o f national efficiency programs. Mexico began regulating distribution transformers m ore than two decades ago when it enacted NOM-J116 in 1977. 35 However, in 1989, a presidential decree modified the Normas Oficiales Mexicanas (Official Mexican Standards) fr om mandatory to voluntary standards; NOM-J116 became NMX-J116, a Norma Mexicana (MexicanStandard). In 1992, the Ley Federal sobre Metrología y Normalización (Federal L aw on Metering and Standards) reestablished the mandatory character of NOMs. In ad dition, this law empowered the Secretaría de Energía (the Mexican equivalent to the US Departmen t of Energy) to formulate and enact mandatory standards for electrical equipment.3-26

A new mandatory standard was enacted in 1994, NOM-0 01-SEMP-1994, to regulate the energy efficiency and safety of electrical equipment including distribution transformers. In 1997, Mexico’s government proposed a revision to NOM-001, and also proposed a new standard, NOM-002-SEDE-1997. 36 NOM-002 was published in the Diario Oficial de la Federación (Official Registry) for public revision and enacted two years later in October 1999. This standard, which regulates liquid-immersed unit s, is the only compulsory efficiency regulation of distribution transformers in Mexico. Dry-type distribution transformers are used in Mexico, but neither government nor industry has mov ed to regulate them. Table 3.8.3 Characteristics of Regulated Distributio n Transformers in Mexico Characteristic Specification Power Supply Single-phase Three-phase Nominal Capacity 5 to 167 kVA (single-phase) 15 to 500 kVA (three-phase) Insulation Class Up to 15 kV Up to 25 kV Up to 34.5 kV Installation Application Pad; Pole; Substation; Subm ersible NOM-002 provides two sets of tables with the specif ied minimum efficiency levels and the unit losses in watts, both tested at 100 percen t of nameplate load. Tables 3.8.3 and 3.8.4 below show the efficiency requirements under NOM-00 2 for large manufacturers and importers of distribution transformers in Mexico. Tables 3.8 .5 and 3.8.6 show the less stringent, transitional standard for small manufacturers with cumulative annual production under 9 kVA. The second set of tables refers to a temporary stan dard, established for eighteen months to ease the transition of small manufacturers to the n ew standard. In May 2001, with the transition period ending, officials from the Mexican Governmen t’s Energy Secretariat met with small manufacturers. These officials found that small manufacturers have not had enough time to bring their production up to the standards in NOM-002. B ecause these manufacturers represent an important source of employment, the Mexican Governm ent decided to extend the transitional period for small manufacturers, without specifying the duration of this extension. 37 While there is only one mandatory standard for distribution transformers, there are several Voluntary Mexican Standards. At this point , there are no plans to revise or propose additional standards for distribution transformers.3-27

Table 3.8.4 Minimum Efficiency Levels for Transforme rs in Mexico Type Capacity kVA Insulation Class Up to 15 kV (%) Up to 25 kV (%) Up to 34.5 kV (%)

Liquid-Immersed, Single-Phase 5 97.90 97.80 97.70 10 98.25 98.15 98.05 15 98.40 98.3 98.2 25 98.55 98.45 98.35 37.5 98.65 98.55 98.45 50 98.75 98.65 98.55 75 98.90 98.80 98.70 100 98.95 98.85 98.75 167 99.00 98.90 98.8

Liquid-Immersed, Three-Phase 15 97.95 97.85 97.75 30 98.25 98.15 98.05 45 98.35 98.25 98.15 75 98.50 98.40 98.30 112.5 98.60 98.50 98.40 150 98.70 98.60 98.5 225 98.75 98.65 98.55 300 98.80 98.70 98.60 500 98.90 98.80 98.7 Note: These efficiency levels are applicable at 100 percent of nameplate load.3-28

Table 3.8.5 Maximum Allowed Losses for Transformers in Mexico

Type Capacity

kVA Insulation Class

Up to 15 kV (Watts) Up to 25 kV (Watts) Up to 34.5 kV (Watts) Core Winding Core Winding Core Winding

LiquidImmersed,SinglePhase 5 30 77 38 74 63 55

10 47 131 57 131 83 116 15 62 182 75 184 115 160 25 86 282 100 294 145 274 37.5 114 399 130 422 185 405 50 138 495 160 524 210 526 75 186 648 215 696 270 718 100 235 826 265 898 320 946 167 365 1322 415 1443 425 1603

LiquidImmersed, Three-Phase 15 88 226 110 220 135 210

30 137 397 165 400 210 387 45 180 575 215 587 265 583 75 255 887 305 915 365 932 112.5 350 1247 405 1308 450 1379 150 450 1526 500 1630 525 1759 225 750 2094 820 2260 900 2410 300 910 2734 1000 2951 1100 3160 500 1330 4231 1475 4598 1540 50463-29

Table 3.8.6 Transitional Standards for Small Manufac turers in Mexico

Type Capacity kVA Insulation Class Up to 15 kV (%) Up to 25 kV (%) Up to 34.5 kV (%)

Liquid-Immersed, Single-Phase 5 97.50 97.40 97.30 10 97.75 97.70 97.60 15 97.95 97.90 97.80 25 98.15 98.10 98.00 37.5 98.35 98.25 98.15 50 98.50 98.40 98.25 75 98.60 98.50 98.40 100 98.70 98.55 98.50 167 98.80 98.60 98.55

Liquid-Immersed, Three-Phase 15 97.50 97.40 97.30 30 97.80 97.70 97.60 45 98.00 97.90 97.80 75 98.15 98.05 97.95 112.5 98.25 98.15 98.05 150 98.35 98.25 98.15 225 98.45 98.35 98.20 300 98.50 98.45 98.25 500 98.55 98.50 98.35 Note: These efficiency levels are applicable to man ufacturers with less than 9 kVA annual production, and should be achieved at 100 percent of nameplate load.3-30

Table 3.8.7 Transitional Maximum Losses for Small Ma nufacturers in Mexico

Type Capacity

kVA Insulation Class

Up to 15 kV (Watts) Up to 25 kV (Watts) Up to 34.5 kV (Watts) Core Winding Core Winding Core Winding

LiquidImmersed,SinglePhase 5 36 92 45 88 74 65

10 61 169 71 164 103 143 15 80 261 93 229 141 196 25 110 361 123 361 176 334 37.5 139 490 157 511 221 486 50 166 595 190 623 254 637 75 238 827 270 872 333 887 100 292 1025 335 1136 385 1138 167 439 1589 530 1841 515 1942

LiquidImmersed, Three-Phase 15 108 277 133 267 156 260

30 173 502 206 500 260 478 45 218 700 259 706 316 696 75 316 1098 374 1118 442 1128 112.5 439 1565 501 1619 551 1686 150 573 1944 627 2045 650 2177 225 934 2608 1005 2770 1121 3003 300 1141 3428 1195 3528 1380 3964 500 1760 5597 1848 5766 2055 6333

3.9 TECHNOLOGY ASSESSMENT A transformer is a device constructed with two prim ary components: a magnetically permeable core, and a conductor of a low-resistance material wound around that core. A distribution transformer's primary function is to change alternating current from one voltage (primary) to a different voltage (secondary). It a ccomplishes this through an alternating magnetic field or "flux" created by the primary winding in the core, which induces the desired voltage in the secondary winding. The change in voltage is de termined by the "turns ratio," or relative number of times the primary and secondary windings are wound around the core. If there are twice as many secondary turns as primary turns, the transformer is a step-up transformer, with a secondary voltage that would be double the primary voltage. Conversely, if the primary has twice as many turns as the secondary, the transform er is called a step-down transformer, with the secondary voltage half as much as the primary volta ge. Distribution transformers are always step-down transformers. Transformer losses are generally small, in the vici nity of a few percent or less of the total3-31

power handled by the transformer. There are two ma in kinds of losses in transformers: no-load (core) losses and load (winding) losses. Higher tr ansformer efficiencies are achieved by reducing the losses associated with these two assemblies: the core and the windings. 3.9.1 Distribution Transformer Types In general, there are two primary types of distribution transformer: liquid-immersed and dry-type. Liquid-immersed transformers typically u se oil as both a coolant (removing heat from the core and coil assembly) and a dielectric medium(preventing electrical arcing across the windings). Liquid-immersed transformers are typica lly used only outdoors because of concerns over oil spills or fire if the oil temperature reac hes the flash-point level. In recent decades, new insulating liquid insulators (e.g., silicone fluid) have been developed which have a higher flashpoint temperature than mineral oil, and transformer s with these liquids can be used for indoor applications. However, high initial costs for thes e low-flammable, liquid-immersed transformers, relative to the cost of dry-type unit s, prevents widespread market adoption. Dry-type transformers are air-cooled, fire-resistan t devices that do not use oil or other liquid insulating/cooling media. Because air is th e basic medium used for insulating and cooling and it is inferior to oil in these functions, all dry-type transformers are larger than liquidimmersed units for the same voltage and/or kVA capa city. As a result, when operating at the same flux and current densities, the core and coil assembly is larger and hence incurs higher losses. Due to the physics of their construction ( including the ability of these units to transfer heat), dry-type units have higher losses than liqui d-immersed units. However, dry-type transformers are an important part of the transform er market because they can offer safety, environmental, and application advantages. 3.9.2 Transformer Efficiency Levels There are two main types of losses in transformers: no-load (core) losses and load (winding) losses. Core losses are virtually constant, occurring continuously in the core material to keep the transformer energized and ready to prov ide power at the secondary terminals. Core losses are present even if the load on the transfor mer is zero. Winding losses occur in the primary and secondary windings around the core, and increase as the square of the load applied to the transformer. Winding losses result primaril y from the electrical resistance of the winding material. Figure 3.9.1 depicts the change in core and coil lo sses with transformer loading on a 75 kVA dry-type transformer, built with copper winding s and an 80 degree temperature rise. This illustration clearly shows the exponential growth o f the winding losses, in relation to the square of the load applied to the transformer.3-32 0 500 1000 1500 2000 2500 3000

0 10 20 30 40 50 60 70 80 90 100 Transformer loading (%)Transformer losses (watts)

Winding losses

Core losses

Figure 3.9.1 Transformer Losses Vary with Load (75 kVA Dry-Type)

The equation used to calculate the percent efficien cy of a transformer at any loading point is given as follows (IEEE, C57.12.00):

Eq. 3.2 

# ( ) load load 2

load load 

### 100 P kVA 1000 EE = P kVA 1000+NL+LL P T  

× × ×     × × × ×  

where:

EEload = percent efficiency at a given per unit load, P load = per unit load, kVA = kVA rating of transformer, NL = no load loss (Watts), LL = load loss (Watts), and T = temperature correction factor. As equation 3.2 shows, the efficiency of a transfor mer is not a static value, but rather will vary depending on the per unit load (P load ) applied to the transformer. Using the losses plo tted in Figure 3.9.1, the Department used equation 3.2 to c alculate the efficiency of this 75 kVA drytype transformer at each loading point from 0 to 10 0 percent of nameplate load. The results are shown in Figure 3.9.2, which clearly indicates that the efficiency of a transformer is not static, but rather varies depending on the load applied. T he apex, or highest point on the efficiency curve, occurs at the loading point where core losse s are equal to winding losses.3-33 84% 86% 88% 90% 92% 94% 96% 98% 100%

0 10 20 30 40 50 60 70 80 90 100 Transformer Loading (%)Transformer Efficiency

Figure 3.9.2 Transformer Efficiency Varies with Load

Consequently, any discussion of transformer efficie ncy must include an assumed loading point. The loading points used in the Department’s analysis of distribution transformers are discussed in the energy use and end-use load charac terization section of this TSD (Chapter 6).

3.9.3 Transformer Losses

This section discusses methods to reduce transforme r losses that have been developed over the nearly 120 years of technology evolution, starting in 1885 with William Stanley. The physical principles of distribution transformer ope ration are discussed in detail in Chapter 2 of the Determination Analysis of Energy Conservation Stand ards for Distribution Transformers

. 1 This section summarizes some of the main technologi cal methods for reducing transformer losses. 38

Core losses occur in the core material of the distr ibution transformer, and are present whenever the transformer is energized—i.e., availab le to provide or providing load. Core losses are chiefly made up of two components: hysteresis and eddy current losses. Hysteresis losses are caused by the magnetic lag or reluctance of the cor e molecules to reorient themselves with the 60 Hz alternating magnetic field applied by the primar y winding. Eddy current losses are actual currents induced in the core by the magnetic field, in the same manner that the field induces current in the secondary winding. However, these c urrents cannot leave the core, and simply circulate within each lamination, eventually becomi ng heat. In both instances, hysteresis and eddy current losses create heat in the core materia l. Measures to reduce core losses include utilizing th inner cold-rolled oriented laminated steel (e.g., M2 or M3) or amorphous material (e.g., Metglas®). However, these measures3-34

increase the manufacturing cost. In the case of am orphous material, due to a lower maximum core flux density, larger cores must be built, whic h increases the winding losses. Winding losses occur in both the primary and second ary windings when a transformer is under load. These losses, the result of electrical resistance in both windings, vary with the square of the load applied to the transformer. As loadingincreases, winding losses increase and are typically much more significant than core losses at levels higher than 50 percent of the nameplate loading point. Methods of reducing winding losses tend to cause anincrease in no-load losses. One method is to increase the cross-sectional area of the conductor (decreasing current density in the winding material), but that means the core has to b e made larger to accommodate the larger volume of the conductor, increasing core losses. T ransposition of a multi-strand conductor can also help reduce winding losses. Table 3.9.1 was prepared by ORNL. 1 This table summarizes the methods of making a transformer more efficient by reducing the number o f watts lost in the core (no-load) and winding (load). However, as previously discussed, measures taken to reduce losses in one area typically increase losses in another. This table p resents those inter-relational issues, as well as the overall impacts on transformer manufacturing co sts. Table 3.9.1 Options and Impacts of Increasing Transf ormer Efficiency No-load losses Load

losses Cost

impact To decrease no-load losses Use lower-loss core materials Lower No change* Higher Decrease flux density by: (a) Increasing core cross-sectional area (CSA) (b) Decreasing volts per turn Lower Lower Higher

Higher Higher

Higher Decrease flux path length by decreasing conductor C SA Lower Higher Lower To decrease load losses Use lower-loss conductor material No change Lower High er Decrease current density by increasing conductor CS A Higher Lower Higher Decrease current path length by: (a) Decreasing core CSA (b) Increasing volts per turn Higher Higher Lower

Lower Lower

Lower *Amorphous-core materials would result in higher lo ad losses

. The methods shown in Table 3.9.1 for making a trans former more efficient are discussed in the screening analysis (Chapter 4) and the engin eering analysis (Chapter 5). The Department’s analysis of the relationship between cost and effic iency for distribution transformers is presented in Chapter 5.3-35

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